New home sales rise, but HIA issues warning

Stephen Cauchi

New home sales edged higher in June, and for the second quarter of 2014, according to figures released on Tuesday by the Housing industry Association.

But despite the increase, home sales appear to have lost momentum, the report said.

The figures show that in June, new home sales increased by 1.2 per cent, driven by a surging 15.9 per cent increase in multi-units but weighed down by a 1 per cent fall in detached homes.

In the June quarter, new home sales increased by 2 per cent, driven by a 2.6 per cent increase in detached house sales. Sales of multi-units fell by 1.7 per cent over the June quarter.

The increase in detached home sales for the quarter was "a healthy note on which to finish the fiscal year", said HIA chief economist Harley Dale.

"The new home building sector will provide a healthy contribution to broader economic growth in 2014-15," Dr Dale said. "However, the magnitude and duration of the current new home building upcycle is less certain than would normally be the case at this juncture ... there are considerable delays occuring in the availability of titled land for detached and semi-detached housing."

The report pointed out the despite the monthly gain, ''it does still appear to be the case that new home sales have lost upward momentum.

''New home building is the hot seat of Australian economic growth at present, so how leading indicators fare in coming months will be an important economy-wide guide.

''In the immediate future, the precise June 2014 quarter profile for building approvals will be a key update for the Australian economy, as will the quarterly profile for construction lending.''

For detached home sales in the month of June:

* There was a decline of 4.2 per cent in Victoria and 3.2 per cent in NSW;

* There was an increase of 1.8 per cent in Queensland, 1.3 per cent in South Australia and 2.2 per cent in Western Australia

For detached home sales in the June quarter:

* Queensland increased 6.6 per cent, Victoria 4.1 per cent, Western Australia 4.1 per cent, and NSW 0.4 per cent.

* In South Australia, sales fell 8.4 per cent.

"South Australia may be the most vulnerable new home building market in the second half of 2014," HIA said.